ADO : Very Niiiiice

When I woke up this morning, the sun was shining, the birds were chirping and the newswires were abuzz with the big news that Anteo (ASX : ADO) had (yesterday) “entends” relationship with Sigma-Aldrich. Is there no end to the innovation that this company is capable of? Not only does Anteo bring you a constant stream of exciting new reagents and inspiring variants of Mix&Go, but it may have very well made a linguistic contribution to mankind as well. I am guessing that “entends” is the merger of “intends” and “extends”. In other words, it is the intention to make an extension. I think it is a perfect forward-looking word for a company with a solid track-record of forward-looking statements.

Let's hope the quality control is better with the products than the website/PR materials.

Let’s hope the quality control is better with the products than the website/PR materials.

All sarcasm aside, congratulations to Geoff and the team at ADO for finally demonstrating a basic level of commercial nouse. As a specialty chemicals company, it has always perplexed me as to why ADO had never executed such a basic manoeuvre as getting into Sigma-Aldrich’s (SA) whopper catalogue. It’s relatively easy to do, doesn’t take too much effort (or intelligence), and although the distribution margins are VERY hefty (i.e. it is challenging to make money out of SA unless you are a top-selling product) it is a nice, simple way of getting some exposure.

Of course, to be clear, by signing a distribution deal with SA at this time of the year, Anteo will not get featured until the 2016 catalogue is out. Therefore, it is fairly unrealistic to expect that this will have any real potential to positively impact revenues in the next 6 months or so. Also, with approximately 300,000 other products in the catalogue, it’s not as though ADO is a stand-out offering. Though I should note that SA sometimes does run features on new products that they find interesting, or for which their market research suggests that there is a larger degree of customer interest.

But it’s a start…!

Great Success

As usual, though, Tina Baumgartner (VP Bus Dev) had to over-egg the pudding with a slightly excessive soundbite. I thought I should clarify for all the shareholders (and potential shareholders) out there what this agreement actually means:

Acceptance of Mix&Go by such a respected party as Sigma-Aldrich provides great commercial validation of Anteo’s Technology.

Er, no it doesn’t.

It means you were able to deal effectively with a mid-level commercial person, follow a paperwork trail and deliver sufficient documentation (i.e. a MSDS) to satisfy their catalogue inclusion process. Having been through the process a couple of times myself, it is mostly just legwork. To be clear, being the leading distributor of specialty chemicals and research reagents is SA’s business model. 

This is an encouraging first step in what is an important relationship, one which is envisaged to generate additional products for sale going forward.

It may be an important relationship, but that is not necessarily a symmetrical statement. The important thing to note about this sentence is probably the words “first step”. Therefore when Anteo talks about extending the relationship with SA (i.e. the “interpreted” headline), I really have no idea what this means. Presumably it means extending the relationship from ordering chemicals from the catalogue to selling chemicals … in the catalogue? It also begs the question as to whether the “second step” is any different then the first?

We expect to build sales over time.

Good, that’s the general idea. And – given the “importance” of this commercial relationship, we will be looking forward to getting a breakdown of revenues from the SA distribution channel in future financial reports. That way, when you articulate a relationship as being “important” we will finally understand what that means to ADO in revenue terms.

Being included in the Sigma-Aldrich range enables unprecedented access for Anteo into Sigma-Aldrich’s key markets …

Like everywhere outside of – and including – Australia?

… and removes some of the barriers to entry that often occur with a direct sales approach. 

Yes. Like, um, creating a sales force.


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